Despite a global downturn in outbound FDI from the US, big businesses still see Canada as a key investment market
According to new research from TMF Group, in association with Forbes Insights, 50% of US-based multinationals still view Canada and its neighbours as central to their corporate investment and growth plans.
The study, 'Venture Further: what drives international expansion and investment by US businesses?', canvassed the views of 250 US-based C-Suite Executives to explore the motivations and challenges of US-headquartered multinationals in taking their organization into a new international market. Respondents were drawn from a wide selection of industries and from organizations with annual revenues ranging in size from $250 million to over $5 billion. Respondents were asked into what regions their organizations had invested in the last two years, as well as where they planned to invest in 2017/18.
Key findings included:
- Despite global FDI downturn, half of US-based multinationals plan to maintain cross-border investment to Canada (and its neighbors) over the next two years
- 1 in 4 investors are looking for new talent or sources of capital
- 1 in 3 stress the importance of thorough research and local market knowledge
Commenting on the findings Jason Gerlis, Regional Director (North America) at TMF Group, said: "Despite the downturn in global FDI across all markets, it's encouraging that US investors are still looking to Canada and its neighbours to achieve their growth ambitions."
He continued: "While there is still some uncertainty arising from talks of import taxation potentially being levied by the Trump administration on Canadian manufactured goods, particularly in the automotive sector, Forbes' Magazine has still ranked Canada as #10 it its global 'Best Countries for Business 2017' and #1 for business in the Americas.
"Indeed, the World Economic Forum has consistently declared Canada's banking system to be one of the most stable in the world and (according to KPMG) total business tax costs are the lowest in the G7 and significantly lower than those in the United States."
In addition, the survey investigated what motivated US-businesses to explore new foreign markets and what challenges they had faced. It also asked respondents what one piece of advice they would give to a peer considering international expansion.
Alongside expanding operations and increasing market share, findings showed that respondents were looking also to find new talent and skills and new sources of capital. They also faced similar challenges in selecting and establishing a new entity, including the establishment of financial processes and compliance with local regulation.
Gary Hakkonen, Managing Director for TMF Canada, added: "The importance of local knowledge when entering a new market – even one as developed as Canada - cannot be underestimated. Whether you are looking to extend or enhance existing operations or looking for new opportunities, it is important to fully understand the local complexities of any given market to make sure your operations are – and remain – fully compliant with what could be a rapidly changing regulatory landscape."
To find out more about TMF Group and to download the full report: tmf-group.com/venturefurther
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